ECN 102 Lecture Notes - Lecture 4: Opportunity Cost
Document Summary
Recall: the opportunity cost of an item is what must be given up to obtain that item. Moving along a ppf involved shifting resources (e. g. labour from the production of one good to the other) Society faces trade-off: getting more of one goods requires sacrificing some of the other first principle of economics. The slope of the ppf tells the opportunity cost of one good in terms of the other. England, because ppf is not as steep as france"s. There are two ways to get the answer. The hard way is to compute the slope of both ppfs: this means meaning that france must give up two units of wine to get an, the slope of france"s ppf: 600300= 2. The slope of england"s ppf: 200300= 23: this means that that england only must sacrifice 23 units of wine to get an additional unit of cloth. additional unit of cloth.
